Demand Flexibility Service 2023 (and beyond!)

MeteredOut

It'll be interesting to see how much below the £3/kWh consumers will be offered (because its very unlikely it'll go up). I suspect suppliers will offer low for the next one, to gauge the level at which consumers will make the effort to change their habits.

Will also be interesting to see the range of different offerings between different suppliers.

MultiFuelBurner

MeteredOut said:

It'll be interesting to see how much below the £3/kWh consumers will be offered (because its very unlikely it'll go up). I suspect suppliers will offer low for the next one, to gauge the level at which consumers will make the effort to change their habits.

Will also be interesting to see the range of different offerings between different suppliers.

It may also be an indication of how commited different suppliers are to the events.

Hopefully no price fixing and collusion meetings between suppliers before hand 😂

TheElectricCow

It’s certainly an interesting one. Octopus for instance only directly pass £2.25/kWh to consumers in test events with the rest presumably going towards their prize funds/bonus points/administration costs, so it is perhaps in their interests to attain the highest rates they can if some cut is going to them.

Andreg

How do they measure the energy savings that are paid for by the scheme: for example when they pay Octopus, does it include 1) all customers of Octopus, 2) those Octopus customers that are registered for the scheme, 3) only those Octopus customers that are registered and opt-in to the session, OR 4) only those customers that opt-in to the session AND actually save energy.?

I suspect that it might be the latter, and therefore overstates the real savings generated by the scheme because a certain amount of the measured energy saving will be random fluctuation that would have occurred anyway.  I mean if you opt-in to every session but do nothing to actually reduce your energy consumption, half the time you will use less energy than normal and will be rewarded and half the time you will use more energy than normal but will not be penalised.

masonic

Andreg said:

How do they measure the energy savings that are paid for by the scheme: for example when they pay Octopus, does it include 1) all customers of Octopus, 2) those Octopus customers that are registered for the scheme, 3) only those Octopus customers that are registered and opt-in to the session, OR 4) only those customers that opt-in to the session AND actually save energy.?

I suspect that it might be the latter, and therefore overstates the real savings generated by the scheme because a certain amount of the measured energy saving will be random fluctuation that would have occurred anyway.  I mean if you opt-in to every session but do nothing to actually reduce your energy consumption, half the time you will use less energy than normal and will be rewarded and half the time you will use more energy than normal but will not be penalised.

It is 4 that is used to calculate the savings and what should be paid by DFS. 1, 2, or 3 would be even worse. The latter option is the closest to reality. The random fluctuations you mention would tend to cancel each other out in terms of measuring the reduction in demand on the grid, but some might get paid a small amount for doing nothing by opting in (given the sentiment in this thread, even some of those going to some effort seem dissatisfied with the rewards). Accidentally saving energy is still helpful during a live session, but those not opting in will not be rewarded. The overall savings would be heavily weighted towards those exporting or making significant reductions.

Lorian

Forgive me for forgetting the details and not looking back but I'm pretty sure in the blocks of bidding last year octopus were successful in some bids over the £3 and those bids were entered on blocks by octopus and in some events the £3 ones were accepted but not those over, something like that. 

Pretty sure it was based around regional blocks too but maybe I dreamt it. The data will still be there.

TheElectricCow

Lorian said:

Forgive me for forgetting the details and not looking back but I'm pretty sure in the blocks of bidding last year octopus were successful in some bids over the £3 and those bids were entered on blocks by octopus and in some events the £3 ones were accepted but not those over, something like that. 

Pretty sure it was based around regional blocks too but maybe I dreamt it. The data will still be there.

The £3 figure was the “Guaranteed Acceptance Price” and applies to test events i.e. any bids at or below that amount would definitely be accepted, but bids could still be made for different values. I don’t recall if any higher prices were ever accepted for tests, but there have always been larger numbers on the table for live events when the service was called into use for real and a genuine demand reduction was needed.

Can’t remember any regional differences but it was a year ago and my memory isn’t faultless either.

Lorian

Test session indicated for tonight 5pm to 6pm

TheElectricCow

NGESO will be holding another DFS webinar on 22nd March which will cover “the performance and use of DFS during winter 23/24 so far and an early view on the future of DFS”, with a full agenda still to be announced.

I’ll of course be giving it a watch and, as before, will summarise any key points for domestic consumers sometime after the event for those interested.

TheElectricCow

Had indented to post this summary before now but life got in the way and general interest in DFS seemed to be fizzling out at the time anyway. However, with Octopus sending out their Saving Session results to those who took part with them, discussion around DFS here has picked up just a bit, so now seems as good a time as any to start talking about the future of the scheme.

The webinar took place a couple of months ago and should still be available on NG's website for anyone wanting to give it a watch. While nothing too significant was confirmed, NGESO did have a few interesting things to say about last winter's scheme and their intentions going forward. The below is a brief write up for anything of particular interest to domestic consumers (as the webinar is fairly industry-focused) based on the notes I took down at the time of watching, so please forgive if my memory has got any of the details slightly off.

The Future of DFS
The biggest questions that came up of course surround the future of the scheme. It was confirmed that DFS is expected to continue next winter, with an estimated timeline given for an industry consultation in June before submitting the plans to Ofgem in August and finally, assuming Ofgem approval, going live again in November. Prior to next winter's launch, NGESO will/have been conducting both consumer and industry research to support the development of the scheme.

There is also some thought going into the future of the scheme's place longer-term. NGESO suggested that they want to ensure a service available to the kind of consumers who take part in DFS but who otherwise are not engaged in other grid balancing systems such as ToU tariffs. It was not suggested that DFS in it's current format would necessarily be that service, but it's likely that DFS will in some way contribute to the ultimate development of such a scheme even if just from a consumer research perspective.

The general impression I got was that the scheme as we currently know it is not intended to be a long term solution without further adjustment & improvement, but no concrete decisions have been made so far. There were several reassurances that they want any system to be competitive and provide value to consumers. They did also clarify that industry feedback & involvement would be a key part of forming any long term plans for future flexibility services.

The end of the webinar was host to a Q&A segment where an interesting comment was made on the top voted question regarding the possibility of a DFS "Turn Up" event. The idea being to reward participants for increasing demand at times of excess supply on the grid (in a similar manner to the negative pricing slots on Octopus Agile) rather than just using DFS to reduce demand when supply is short. NGESO said this is something they are considering but didn't divulge much more than that at this stage.

The Money and GAP
Naturally, NGESO didn't delve too deeply into the topic of finances around DFS, but they did provide a few comments worth mentioning especially around the "Guaranteed Acceptance Price" (GAP).

The final round of 7 "competitive tests" last winter ran without a GAP and to encourage competition NGESO set their procurement target (the total demand reduction they wanted to achieve) at varying levels below what could potentially be delivered. Two points of note here were that with higher procurement targets higher priced bids were made, and that with the lower procurement targets fewer providers won contracts, which in turn limited evidence for consumers needing high prices to take part.

• So far, most test sessions have ran with a pre-published GAP which dictates a certain value of supplier bids for demand reduction that NGESO will definitely accept. The purpose of this is to ensure rewards are kept high enough to encourage early engagement with the scheme, but there is an aim to keep the GAP either as low as possible or to remove it entirely. With this in mind, they do acknowledge they want to ensure the service still provides value to consumers and that there is potential for DFS to be used alongside other services in future.
• The idea of consumer performance monitoring was raised to combat any potential gaming from "baseline inflation" or poor forecasting on the supplier side. This was not yet confirmed for next winter either way.
• Some acknowledgement was given to the difficulty of engaging domestic consumers in the energy market, and that they were looking at options for "keeping rewards engaging"
• NGESO says the tests have given useful insight into pricing responses and that any Demand Side Response system would look at the whole energy market to determine where to focus costs.

The Sats
A few statistics were given out on the webinar (as well as some lovely graphs), but here's just a few highlights:

• 2.4 Million meter points subscribed to DFS this time around - 800,000 more than the previous year
• 99.7% of participants were domestic consumers
• The typical domestic reduction per household was under 1kWh, which made up 90% of domestic reduction
• The largest individual reduction from an industrial participant was 3.6MWh
• The scheme was able to achieve reductions of 450MWh for day ahead sessions and 350MWh for within day (short notice) sessions